CBN Targets 63m Savings Accounts by 2020

As part of its financial inclusion strategy, the Central Bank of Nigeria (CBN) has said it aims to achieve a total number of 63 million users of banks’ savings account product by 2020, from the 21 million it was last year.

The apex bank, which planned to achieve this target in conjunction with the commercial and microfinance banks (MFBs), said the target required a 12 per cent compound annual growth rate (CAGR) from 2011 to 2020.

These targets formed part of the CBN’s “National Financial Inclusion Strategy,” posted on its website. The regulator had set an initial target of 39 million users of savings product by 2015.
It added: “A significant burden on increasing savings is the current Know-Your-Customers (KYC) requirements for opening and maintaining bank accounts. This issue must be addressed.

“To support the target picture for financial inclusion in 2020, the number of bank branches will need to increase from 5,797 in 2010 to 10,000 in 2020. The number of Automated Teller Machines (ATMs) will need to increase from 9,958 to 62,440 and the number of Point of Sale (PoS) devices from 11,223 to 400,000. A mobile agent network of 65,000 agents will also be required by 2020.”
The CBN however, expressed concern over the low credit penetration in the country. While the country had only two per cent access to formal credit, according to the report, Tanzania – 16 per cent, South Africa had 32 per cent.

“With its 15 loan accounts at commercial banks per 1,000 people, Nigeria pales in comparison with Malaysia, which has 963 loan accounts per 1,000 people. Outside of South Africa, where insurance penetration is 30 per cent, insurance penetration in Africa is relatively low.
“However, Nigeria's insurance sector performs poorly even compared to its African peers, with just 1 per cent penetration. Poor insurance literacy and a lack of trust are considered the major factors keeping the use of insurance in Nigeria low. Significant intervention is required in order to reverse the current trend,” it revealed.

The 117-page document, which was prepared by the Roland Berger Strategy Consultant team, outlined the branch model, retail agent led model, mobile payment led model and the client empowerment model, as some of the strategies it intends to use to achieve its 2020 financial inclusion targets.

The report stated: “The Branch model is the model of banking that exists in Nigeria today. It relies on traditional bricks-and-mortar branches as the dominant channel for delivering banking services.

“The preferred model is a combination of all five models. It leverages existing global best practices to increase financial inclusion to target levels. It focuses on technology-driven, low cost channels that can be deployed easily to ensure that access is significantly increased in a way that is profitable for both the providers of financial services and end users.
“The preferred model would require 4,100 branches, 3,400 mini-branches, 51,800 ATMs, 122,000 retail agents and 55,200 mobile agents.”

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